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BRIEFING

JULY 2017

CO2 emissions from new passenger cars in the EU: Car manufacturers’ performance in 2016

The purpose of this briefing paper is to provide a summary of CO2 emission levels of new passenger cars in the European Union (EU) in 2016. The briefing is based on a preliminary dataset recently released by the European Environment Agency (EEA) on

monitoring CO2 emissions from new passenger cars in the EU. New cars sold in the EU

in 2016 had average CO2 emissions of 118 g CO2/km, which was 1.2% lower than in 2015.

As a follow-up to the previous year’s briefing,1 this paper details manufacturers’

performance in terms of CO2 emissions reduction, fuel and technology trends, and market share. The paper focuses on differences between Member States, as well as between the major manufacturer groups. It also discusses the impact of the super-

credit provision on the average CO2 emission values of manufacturer groups.

1. BACKGROUND

The EEA recently released a preliminary dataset on the CO2 emissions performance of new passenger cars in the EU in 2016.2 This dataset is at the core of the monitoring scheme of

CO2 emissions from passenger cars, and is used by the European Commission to evaluate

whether car manufacturers comply with their mandatory CO2 targets as defined in the

1 Sonsoles Díaz, Uwe Tietge, and Peter Mock, CO2 emissions from new passenger cars in the EU: Car manufacturers’ performance in 2015 (ICCT: Washington DC, 2015). http://www.theicct.org/co2-from-new-cars- eu-2015.

2 European Environment Agency, “Monitoring of CO2 emissions from passenger cars – Regulation 443/2009” (2017). https://www.eea.europa.eu/data-and-maps/data/co2-cars-emission-12.

Prepared by: Murat Şenzeybek, Uwe Tietge, Peter Mock

BEIJING | BERLIN | BRUSSELS | SAN FRANCISCO | WASHINGTON ICCT BRIEFING

Regulation EC 443/2009. The EEA collects the data from the Member States, which are required to submit detailed information on each new car registered on a yearly basis.

The EEA data show that the sales-weighted average CO2 emissions from new passenger cars in the EU in 2016 were 118 g CO2 /km, 1.2% lower than in 2015. As illustrated in

Figure 1, average CO2 emissions from new cars decreased by more than 27% from 2005 to 2016. From 2008, when CO2 targets were first agreed upon, CO2 emissions fell at an average rate of 3.2% per year, and vehicle manufacturers reached the average 2015 target of 130 g/km in time. If average CO2 emissions from new cars continue to decrease at a similar pace, car manufacturers would meet the 2020/21 target of 95 g CO2/km, which includes a one-year phase-in. The reduction rate is much higher than in a business- as-usual scenario without mandatory standards: Before mandatory standards were agreed upon in 2008, the annual rate of improvement was only about 1.2%.

The reduction of CO2 emissions implies a reduction in fuel consumption, as they are effectively proportional. Since 2005, fuel consumption has decreased from 6.9 l/100km to 5.1 l/100km (gasoline equivalent) in 2016.3

180 historical data trends targets

160

business as usual: −1.2%/year until 2007 140

emission values (g/km) 2015: 130 g/km 2

120 with standards: −3.2%/year from 2008

Average CO 100 2020: 95 g/km (one year phase-in)

80 2005 2010 2015 2020 Year

Figure 1. Historical development, trends, and targets for CO2 emission levels of new passenger cars in the EU. Effects of phase-in, super-credits, and eco-innovations are not considered here.

2. CO2 EMISSIONS BY VEHICLE MANUFACTURER Car manufacturers can pool together the average emissions of several brands to meet

CO2 standards (only the average CO2 emissions of a pool as a whole are regulated). For the purpose of this analysis, we follow a definition of manufacturer groups that is

3 The factor of 23.3 g CO2/km per liter gasoline/100 km was used to convert from CO2 emissions to fuel consumption.

2 CO2 EMISSIONS FROM NEW PASSENGER CARS IN THE EU: CAR MANUFACTURERS’ PERFORMANCE IN 2016 intended to mirror the actual vehicle market as closely as possible and may be different from manufacturer pools in the context of the EU regulations.4

Figure 2 illustrates the distance of each manufacturer group to its 2015 and 2020/21 emission targets. The 2015 and 2020/21 targets for each manufacturer group are set according to the average mass of their new fleet, based on the limit value curves displayed in the figure. The exact 2020/21 target line equation has not been officially set yet, as it will be adjusted based on the average mass of new passenger cars in the three calendar years leading up to the target year. For the current analysis, the 2020/21 target equation was defined using the 2016 average vehicle mass. For each manufacturer group, the 2020/21 target implies a decrease of approximately 27% in average CO2 emissions compared to the 2015 target.

160

2015 TARGET LINE 140

Ford BMW Daimler 120 FCA -Nissan Average PSA

(g/km) Toyota 100 2020 TARGET LINE

80 emissions 2

CO 60

40 Average

20

0 1,100 1,300 1,500 1,700 Average vehicle mass (kg)

Figure 2. Performance of the top-selling EU passenger car manufacturer groups for 2016, along with the 2015 and 2020 (effectively 2021) target lines. For PSA and Renault-Nissan the changes in their respective fleet averages resulting from the recently announced mergers with /Mitsubishi are indicated with arrows.

Table 1 presents average CO2 emission values for the eight major manufacturer groups (representing 86% of the 2016 EU new car registrations), both with and without considering the effect of super-credits. Super-credits are favorable weightings for cars emitting less than 50 g CO2/km. The impact of super-credits is discussed in detail in Section 4. It should be noted that to illustrate the effect of super-credits, the 2021 multiplier 1.67 has been applied in the table. The 2020/21 target for each manufacturer was calculated using the respective average mass in 2016.

4 Manufacturers are defined here as: PSA (, , DS Automobiles, with and without Opel); Toyota (Daihatsu, Lexus, Toyota); Renault-Nissan (Dacia, Infiniti, Lada, Nissan, Renault, with and without Mitsubishi); Ford (Ford, Lincoln); FCA (, , , , , , ); Volkswagen (, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda, Volkswagen); Daimler (Mercedes-Benz, Smart); and BMW (BMW, Mini). Mitsubishi Motors joined the Renault-Nissan alliance in October 2016. Opel was acquired by PSA in March 2017.

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Table 1. Manufacturer group market shares, average vehicle mass, CO2 emissions with and without super-credits for 2016, and CO2 emission targets for 2020 (effectively 2021).

CO (g/km) 2 EU market Average 2016 w/o 2016 w/ super- 2020/21 share mass (kg) super-credits credits for 2021 target Toyota 4% 1,340 105 105 93 PSA 17% 1,281 110 110 91 Renault-Nissan 15% 1,304 111 110 92 Average 1,388 118 118 95 FCA 6% 1,247 120 120 90 Ford 7% 1,369 120 120 94 Volkswagen 24% 1,419 120 120 96 BMW 7% 1,572 123 121 101 Daimler 6% 1,584 125 125 102

Overall, the CO2 reduction progress from 2015 to 2016 was slow for most manufacturers. The market share of PSA increased from 11% in 2015 to 17% in 2016, thanks to the recent acquisition of Opel. At the same time, average fleet CO2 emissions of PSA including Opel increased by 5 g/km to a level of 110 g/km. The 2020/21 target for PSA remained stable at 91 g/km despite efficiency improvements by the two major PSA brands Peugeot and

Citroën, indicating that the Opel brand is still further away from its 2020/21 CO2 target level than the rest of the new PSA group (see Figure 1). Toyota remains the manufacturer group closest to its 2020/21 target, with a current emissions level of 105 g/km CO2 and a target of 93 g/km. An effect of super-credits at the manufacturer group level is only notable for Renault-Nissan and BMW, respectively benefiting from a 1 g/km and 2 g/km reduction of average CO2 values as a result of the super-credits provision.

3. FUEL/TECHNOLOGY TRENDS BY MEMBER STATE AND MANUFACTURER Passenger cars powered by alternative fuels made up a small share of the new EU car fleet in 2016. The share of electric vehicles, namely hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and battery electric vehicles (BEVs), increased from 2.5% in 2015 to 3.2%. Conventional diesel and petrol cars accounted for 95% of new cars. With a market share of 49%, diesel cars continued to account for most new registrations, but lost three percentage points compared to 2015.5

Table 2 presents the market share of various fuels and technologies in 2016 by country.6 Alternative fuel types such as hydrogen, compressed natural gas (CNG), ethanol- gasoline mix, and liquefied petroleum gas (LPG) have been grouped as “Other.”

5 For details on the recent developments in diesel market shares in Europe see “Cities driving diesel out of the European car market,” Uwe Tietge and Sonsoles Díaz, 16 May 2017, http://theicct.org/blogs/staff/cities- driving-diesel-out-european-car-market. 6 Because the EEA data do not include details on plug-in hybrid electric vehicles, EEA data have been supplemented with commercial data obtained from IHS-Polk.

4 CO2 EMISSIONS FROM NEW PASSENGER CARS IN THE EU: CAR MANUFACTURERS’ PERFORMANCE IN 2016

Table 2. Market share of fuels/technologies for new passenger cars in 2016, by country.

Plug-in EU Hybrid- hybrid Battery- Market Diesel Petrol electric electric electric Other share EU Total 49% 46% 1.9% 0.7% 0.6% 1.1% — Germany 46% 52% 1.0% 0.4% 0.4% 0.2% 22.9% UK 48% 49% 1.9% 1.0% 0.5% 0.0% 18.4% France 52% 44% 2.4% 0.3% 1.1% 0.1% 13.5% Italy 57% 33% 2.0% 0.1% 0.1% 7.8% 12.6% Others (EU) 40% 58% 1.6% 0.1% 0.1% 0.9% 8.0% Spain 57% 40% 2.7% 0.1% 0.2% 0.0% 7.8% Belgium 52% 44% 1.7% 1.3% 0.4% 0.4% 3.7% Netherlands 19% 72% 2.9% 4.8% 1.1% 0.4% 2.6% Sweden 53% 39% 3.6% 2.7% 0.9% 1.2% 2.5% Austria 57% 40% 1.0% 0.4% 1.2% 0.2% 2.3% Denmark 36% 61% 2.6% 0.2% 0.6% 0.1% 1.5% Portugal 65% 32% 1.5% 0.5% 0.4% 0.5% 1.4% Ireland 70% 28% 1.8% 0.2% 0.3% 0.3% 1.0% Finland 33% 62% 3.4% 1.6% 0.2% 0.2% 0.8% Greece 54% 43% 1.9% 0.1% 0.1% 0.3% 0.5% Luxembourg 65% 33% 1.1% 0.3% 0.4% 0.0% 0.3% Iceland 44% 45% 3.8% 3.2% 1.3% 1.9% — Norway 31% 29% 11.3% 13.4% 15.7% 0.0% — Switzerland 39% 56% 2.4% 0.8% 1.1% 0.3% — Turkey 61% 38% 0.1% 0.0% 0.0% 0.0% —

Norway remains at the forefront of the European electric vehicle market, with 15.7% of new car registrations in 2016 being BEVs and another 13.4% being PHEVs. In addition, 11.3% of vehicles are HEVs. For PHEVs, the Netherlands, Iceland, and Sweden7 show relatively high market shares (4.8%, 3.2%, and 2.7%). However, the PHEV market share in the Netherlands dropped from 8.8% in 2015 to 4.8% in 2016. In Finland, on the other hand, the market share of PHEV increased from 0.4% to 1.6% within the last year.

Table 3 presents the market share of fuels/technologies in 2016 for major car manufacturer groups and brands, sorted by descending market shares of manufacturer groups.

The Toyota group clearly stands out with the highest share of HEVs (40.8% of sales), followed by the Kia brand as a distant second with 1.9%. As in 2015, Renault-Nissan and BMW led the BEV market. BEVs accounted for 1.6% and 1.1% of their 2016 sales, respectively. As for the PHEV market, BMW and Daimler are leading the market with shares of 2.0% and 1.4%, respectively. However, at the brand level we observe much higher market shares, with PHEVs accounting for more than 14.8% of Mitsubishi’s total

7 For details on electric vehicle sales in Sweden see “Lessons learned from Sweden’s electric vehicle rollercoaster,” Uwe Tietge, 14 February 2017, http://www.theicct.org/blogs/staff/lessons-learned-sweden-EV- rollercoaster.

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sales. Porsche and Volvo also sold a considerable share of PHEVs (4.8% and 4.5% respectively). The Italian automaker Fiat led the market for natural gas vehicles, which made up 6.3% of total sales.

Table 3. Market share of fuel/technologies for new passenger cars in 2015 for selected brands and manufacturers.

Hybrid- Plug-in hybrid Battery- EU Market Diesel Petrol electric electric electric Other share EU Total 49% 46% 1.9% 0.7% 0.6% 1.1% — Volkswagen 53% 46% 0.0% 0.8% 0.1% 1.0% 23.9% VW 52% 46% 0.0% 1.0% 0.2% 1.3% 11.3% Audi 69% 30% 0.0% 0.9% 0.0% 0.3% 5.5% Škoda 45% 54% 0.0% 0.0% 0.0% 1.0% 4.3% SEAT 36% 63% 0.0% 0.0% 0.0% 1.0% 2.3% Porsche 40% 55% 0.2% 4.8% 0.0% 0.0% 0.5% PSA 44% 55% 0.1% 0.0% 0.2% 1.2% 16.4% Peugeot 53% 47% 0.1% 0.0% 0.2% 0.2% 5.7% Opel 33% 63% 0.0% 0.0% 0.0% 3.8% 4.9% Citroën 50% 50% 0.0% 0.0% 0.4% 0.0% 3.6% Vauxhall 28% 72% 0.0% 0.0% 0.0% 0.0% 1.7% DS 51% 48% 0.7% 0.0% 0.0% 0.0% 0.4% Renault-Nissan 50% 46% 0.0% 0.7% 1.6% 0.8% 14.6% Renault 55% 44% 0.0% 0.0% 1.8% 0.0% 7.3% Nissan 50% 46% 0.0% 0.0% 2.8% 0.7% 3.7% Dacia 44% 53% 0.0% 0.0% 0.0% 3.0% 2.8% Mitsubishi 30% 54% 0.0% 14.8% 0.1% 0.2% 0.7% Ford 46% 52% 0.1% 0.0% 0.0% 1.5% 7.0% Ford 46% 52% 0.1% 0.0% 0.0% 1.5% 7.0% FCA 41% 53% 0.0% 0.0% 0.0% 6.3% 6.8% Fiat 36% 58% 0.0% 0.0% 0.0% 6.2% 5.1% BMW 67% 30% 0.0% 2.0% 1.1% 0.0% 6.7% BMW 74% 22% 0.0% 2.5% 1.3% 0.0% 5.4% Mini 38% 62% 0.0% 0.0% 0.0% 0.0% 1.4% Daimler 63% 35% 0.4% 1.4% 0.2% 0.1% 6.3% Mercedes-Benz 71% 27% 0.4% 1.6% 0.2% 0.1% 5.6% Smart 0% 100% 0.0% 0.0% 0.3% 0.0% 0.7% Toyota 14% 45% 40.8% 0.1% 0.0% 0.0% 4.2% Toyota 15% 47% 36.9% 0.2% 0.0% 0.0% 3.9% Lexus 0% 7% 93.2% 0.0% 0.0% 0.0% 0.3% Other brands Hyundai 42% 56% 0.5% 0.0% 0.1% 1.5% 3.4% Kia 48% 48% 1.9% 0.2% 0.7% 1.5% 2.9% Volvo 83% 12% 0.0% 4.5% 0.0% 0.3% 1.9% Honda 38% 62% 0.0% 0.0% 0.0% 0.0% 1.0%

6 CO2 EMISSIONS FROM NEW PASSENGER CARS IN THE EU: CAR MANUFACTURERS’ PERFORMANCE IN 2016

4. SUPER-CREDITS Super-credits were introduced to incentivize car manufacturers to produce low-carbon vehicles, such as PHEVs and BEVs. According to the super-credit provision, vehicles with low CO2 emissions, below 50 g CO2/km, are assigned an increased weight when calculating manufacturers’ average emissions.

During the first stage of super-credits, from 2013 to 2015, the following weighting factors applied: Each low-emitting car counted as 3.5 cars in 2013, 2.5 in 2014, 1.5 in 2015, and 1 starting in 2016. The second stage is planned for 2020 to 2023, although the weighting factors will be lower than in the first period. For this second phase, the following multipliers will be used: Each low-emitting car will count as 2 cars in 2020, 1.67 in 2021, 1.33 in 2022, and 1 starting in 2023. There will be a cap on super-credits’ contribution to

CO2 reductions of 7.5 g CO2/km per manufacturer over the entire period.

The number of vehicles that qualify for the super-credits showed a modest 2% increase from 2015 to 2016. The effect of super-credits on average CO2 emissions of car manufacturers was rather limited. Table 4 presents the effect of super-credits on average CO2 emissions of both manufacturer groups and a selection of their brands in 2015 and 2016.

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Table 4. Effect of super-credits on CO2 emissions by manufacturer group and brand. Super-credits multiplier was 1.5 in 2015 and 1.67 in 2016 (super-credits multiplier for 2021 used).

2015 2016 Reduction

Avg. CO2 emissions (g/km) Avg. CO2 emissions (g/km) since 2015 w/o super- w/ super- w/o super- w/ super- w/o super- w/ super- credits credits Difference credits credits Difference credits credits Toyota 108.3 108.3 0.0 105.5 105.5 0.0 3% 3% Toyota 107.9 107.8 0.0 104.6 104.6 0.0 3% 3% Lexus 115.5 115.5 0.0 118.5 118.5 0.0 -3% -3% PSA 113.1 113.0 0.0 110.4 110.3 0.1 2% 2% Peugeot 103.7 103.7 0.1 101.7 101.6 0.1 2% 2% Citroën 105.9 105.8 0.1 103.2 102.9 0.3 3% 3% DS 103.6 103.6 0.0 103.8 103.8 0.0 0% 0% Opel 126.1 126.1 0.0 122.6 122.6 0.0 3% 3% Vauxhall 128.5 128.5 0.0 123.6 123.6 0.0 4% 4% Renault-Nissan 112.0 110.7 1.3 111.2 109.7 1.5 1% 1% Renault 106.2 105.3 0.9 105.2 104.0 1.2 1% 1% Nissan 114.6 113.3 1.3 116.2 114.1 2.1 -1% -1% Dacia 122.7 122.7 0.0 117.8 117.8 0.0 4% 4% Mitsubishi 110.0 103.0 7.0 118.1 111.1 7.0 -7% -8% FCA 121.7 121.7 0.0 120.0 120.0 0.0 1% 1% Fiat 117.8 117.8 0.0 116.4 116.4 0.0 1% 1% Ford 118.0 118.0 0.0 120.0 120.0 0.0 -2% -2% Ford 118.0 118.0 0.0 120.0 120.0 0.0 -2% -2% Volkswagen 121.3 120.9 0.4 120.4 120.0 0.4 1% 1% Škoda 115.5 115.5 0.0 111.9 111.9 0.0 3% 3% SEAT 116.6 116.6 0.0 115.8 115.8 0.0 1% 1% VW 118.8 118.2 0.6 118.7 118.0 0.7 0% 0% Audi 127.8 127.2 0.6 126.2 125.9 0.3 1% 1% Porsche 183.8 183.8 0.0 185.1 185.1 0.0 -1% -1% BMW 126.2 125.6 0.7 122.9 121.4 1.5 3% 3% Mini 117.7 117.7 0.0 117.2 117.2 0.0 0% 0% BMW 128.4 127.6 0.8 124.4 122.5 1.9 3% 4% Daimler 124.7 124.3 0.5 125.3 124.7 0.6 0% 0% Smart 94.1 93.2 0.9 95.9 95.8 0.2 -2% -3% Mercedes-Benz 128.7 128.3 0.4 129.0 128.3 0.7 0% 0% Other brands Volvo 121.9 120.7 1.2 121.2 119.2 2.0 1% 1% Hyundai 127.3 127.3 0.0 124.5 124.4 0.1 2% 2% Kia 128.0 127.2 0.8 124.8 124.1 0.7 3% 2% Honda 131.3 131.3 0.0 126.9 126.9 0.0 3% 3%

8 CO2 EMISSIONS FROM NEW PASSENGER CARS IN THE EU: CAR MANUFACTURERS’ PERFORMANCE IN 2016

At the group level, the provision translated into a maximum reduction of 1.5 g CO2 /km‌ for Renault-Nissan and BMW due to the groups’ comparatively high share of BEVs and/or PHEVs. At the brand level, the effect of super-credits was most notable for

Mitsubishi, with a reduction of 7 g CO2/km in the average emissions of the brand.

5. INTERNATIONAL CONTEXT In the international context, the EU has historically been a front-runner with respect to vehicle emission targets. In recent years, however, most large economies have set converging CO2 emission targets for new vehicles (Figure 3). Compared to the EU’s

2020/21 target of 95 g CO2 /km, the United States (99 g CO2 /km for 2025 passenger cars), South Korea (97 g CO2 /km by 2020), and Canada (99 g CO2 /km by 2025) have set similar targets.

220 9 200 8 180

7 160 Mexico 2016: 145

KSA 2020: 142 140 Brazil 2017: 138 6

120 India 2022: 113 5 China Japan 2020: 122* 2020: 117 100 Canada 2025: 99 US 2025: 99 S.Korea 2020: 97 EU2021: 95 4 80 3 60 2 40 historical performance enacted target emission values (g/km), normalized to NEDC 2 20 1 Fuel consumption (l/100km gasoline equivalent) CO * Note that Japan has already met its 2020 statutory target as of 2013 0 0 2000 2005 2010 2015 2020 2025 2030

8 Figure 3. Comparison of global CO2 regulations for new passenger cars.

6. OUTLOOK It should be noted that the EEA dataset has yet to be validated. The final dataset will be published at the end of 2017, so the specific numbers in this report may change.9 The preliminary data for 2016 should, however, provide relatively reliable results. Real-world emissions are significantly higher than the official values used here. The gap between official and real-world 2CO emission values of European cars has been widening over time and reached approximately 42% in 2015, indicating that the values

8 China’s target reflects gasoline vehicles only. U.S. CO2 emission values are derived from fuel economy standards set by NHTSA, reflecting tailpipe GHG emission (i.e., they exclude low-GWP refrigerant credits incorporated in the U.S. EPA GHG regulation). Gasoline in Brazil contains 22% ethanol (E22); all data in the chart have been converted to the gasoline (E00) equivalent. Supporting data can be found at www.theicct.org/info-tools/global-passenger-vehicle-standards. 9 Historically the difference between preliminary and final data has been low. In 2015, there was a less

than 0.01% difference in the preliminary and final data for average CO2 emissions.

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presented in this briefing significantly underestimate on-road emissions and fuel consumption.10 The ICCT will follow up on European emissions data in the forthcoming European Vehicle Market Statistics Pocketbook 2017/2018.11

10 Uwe Tietge, et al., From laboratory to road – A 2016 update of official and “real-world” fuel consumption and

CO2 values for passenger cars in Europe, (ICCT: Washington DC, 2016). http://www.theicct.org/laboratory- road-2016-update. 11 International Council on Clean Transportation, European vehicle market statistics pocketbook 2017/2018. http://eupocketbook.org.

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